I love challenging the status quo.

A number of years ago, Hofbrau, one of the six original German Munich breweries who can produce and sell Oktoberfest beer in that country, developed a unique business model.  Once they established an importing agency in the U.S., focusing on their Munich heritage, Hofbrau decided to franchise its name while using their famous Munich beer hall.

Today in the U.S. there are seven Hofbrau franchised beer halls.  There are several models one can invest in, depending on what the buyer would like to purchase, including a full-blown brewery.  Obviously these halls are German themed, with authentic outfits, glassware, banners etc., including the original Hofbrau from Munich.  Hofbrau is not trying to be something they are not; they are building on what they already are.

Even though these Hofbrau houses are franchised, and not part of Hofbrau, it is only from a legal view that the average observer would know these houses are not part of Hofbrau.  The laws have either been changed or modified by states to allow craft brewers to sell their beers in-house or to-go.  Some crafts, where it is legal to do so, are building brew pubs in other markets, not unlike Hofbrau, only they are not franchised.

Some crafts, Anchor, Boston, New Belgium, Yuengling, and even Rogue, have themed bars in locations like airports.  In such bars, their beers are served along with food.  It is called the blurring of the three tier system, but is this not really the melting together of the current system?

Two weeks ago, Diageo, the owner of Guinness, announced that Diageo would build a version of Guinness’s Dublin Open Gate Brewery in Maryland.  Their goal is to open the brewery in October in celebration of the 200th anniversary of its first importation. In addition to the brewery, Guinness will have a tasting room, retail store, packaging and warehouse.  The total investment is reported to be around $50 million dollars.  While the iconic Guinness will not be brewed there, Guinness Blonde will be, along with other special brews. A number of Maryland beer laws need to be modified or changed to allow Diageo to build this facility, but considering the economic impact of what this brewery means to Maryland, one can count on those laws being changed.

So the bigger question is now: will this new business model of the major breweries continue in the future?  We all are aware of AB’s expansion of craft brew pubs of the beers they currently own.  Now we see this model unveiled with Guinness.  Will the major breweries start building these eclectic breweries in major cities or tourist areas?  Why not?

Even if these models by-pass the middle tier, the local wholesaler should benefit from the money the brewery invests in their market.  Will the locals support those brands?  It is working for those who have made the investment, like Hofbrau!  It is working for all the crafts!  It will work for Guinness.

The melting of the tiers continues and, in fact, seems to be accelerating today.  Look for others to follow Guinness and Hofbrau in the not too distant future.  The new definition of this centuries “tied house.”

I love challenging the status quo….